SOUTH AMERICAN ENERGY MARKETS DAILY ROUNDUP (April 29, 2009): Brazil’s gas consumption rises by 3.01% in March to 34.4 million cu m/day

South American Energy Markets (SAEM) publishes a daily roundup of the top-five stories affecting energy markets in the region with links. The roundup includes all the major web dailies of South America and other websites that write about the region’s energy markets. SAEM Daily Roundup appears from Monday through Friday and is published by noon London time.

South American Energy Markets Daily Roundup will be published again on Monday, May 4, 2009.

Wednesday, April 29, 2009

BRAZIL/GAS CONSUMPTION

After retreating for two-consecutive months, gas consumption in Brazil rose by 3.01% in March to 34.4 million cu m/day compared with the previous month, reports Gasbrasil.com, citing gas association Abegas. Despite the positive news, gas consumption compared with a year ago plummeted by 32.49%. By sectors, households saw the biggest fall (-6.56%) followed by cogeneration (-2.96%), automotive (-2.41%) and commercial establishments (-0.99%). The industrial southeast, comprising of the state of Sao Paulo, Minas Gerais, Rio de Janeiro and Espirito Santo, consumed the lion’s share of the gas (24.7 million cu m/day). COMMENT: It is a good sign that month-on-month consumption is improving. However, the year-ago figure shows that Brazil’s economy has cooled considerably.

BOLIVIA/YPFB WOES

Yacimientos Petroliferos Fiscales Bolivianos (YPFB) president, Carlos Villegas, has asked the supreme court of Bolivia to declare null and void the agreement signed between Catler Uniservice and the state-owned energy company to build an $86 million gas-processing plant at Rio Grande in Santa Cruz department, reports state-owned news agency ABI. The murder in January of a Catler Uniservice energy director after a payoff of $450,000 led to the resignation of former YPFB president Santos Ramirez after he was allegedly linked to the crime. COMMENT: The scandal surrounding the corruption charges against Ramirez are a hard blow for Bolivia’s energy sector. Some analysts claim that corruption in YPFB is more widespread than what the government may want Bolivians to believe.

URUGUAY/POWER SUPPLY

A drought in Uruguay, which has hit hydropower generation output, has impacted state-owned power group UTE’s cashflow, writes Montevideo daily El Pais. Apart from $25 million allocated to the company by the ministry of economy, UTE has had to seek $60 million in loans from banks. Last year, the company was obliged to pay $350 million in imported fuel costs due to the drought. COMMENT: With no end to Uruguay’s drought, the tiny South America’s country energy problems will get worse as winter approaches. About two thirds of the country’s power is generated by hydropower installations.

ARGENTINE/GAS TARIFFS

A court has turned down a lawsuit by the ombudsman to declare government-approved gas tariff hikes illegal, reports Buenos Aires daily La Nacion. The lawsuit, which was presented to the court in February, argued that tariff hikes were “arbitrary and illegal” because they include a charge to pay for imported gas from Bolivia and LNG purchases. COMMENT: If the government does not have enough money to finance investments or imports as in the case of gas, it is nothing new that a fund is created. This is the way the government financed the construction of two combined cycle gas turbine plants at Campana and Timbues.

BRAZIL/GAS TARIFFS

(Originally published on April 28, 2009) An auction by Petrobras for short-term gas supplies in May saw a 36% fall in prices to $4.20/million BTU, reports Gasbrasil.com, citing Rio de Janeiro daily O Globo. Gas auctioned for the month of June was sold at $4.25/million BTU, a 35% fall. The amount of gas auctioned in May represents 37% of the gas (3.24 million cu m/day) that was offered. COMMENT: The impact of the new gas law, which was signed into law in March by President Luiz Inacio Lula da Silva, appears to be making a positive impact. Even so, some analysts see gas tariffs pricing in the country lacking clear benchmarks and government policy.

These briefs can be reprinted as long as the source is cited.

If you have any feedback on today’s articles, or if there are energy industry stories you think should be covered, or need research assistance, please contact etessieri@latamreport.com.